When Wales and West Utilities (WWU) was acquired by the CKI group in a deal that valued the business at more than £2bn, current CEO Graham Edwards was invited to stay on and run the company.

When Wales and West Utilities (WWU) was acquired by the CKI group in a deal that valued the business at more than £2bn, current CEO Graham Edwards was invited to stay on and run the company.

The Hong Kong-based conglomerate is the largest single private infrastructure investor in the UK with interests ranging from gas and electricity distribution to Northumbrian Water and three ports.

An invitation to continue in his role was the ultimate endorsement for the man who has guided WWU’s fortunes since it was established seven years ago.

Speaking at the firm’s Newport headquarters Mr Edwards said: “This business was spawned out of the National Grid when Transco sold four of its UK gas distribution networks. This business was bought by a consortia of investors led by Macquarie European Infrastructure Fund and I was brought in to run it.”

As one of the firm’s founding members he cannot resist adding: “For four years we have been the top network performer in customer service, as recognised by the regulator and a leading player in safety and efficiency.”

All of which adds up to WWU being recognised as a leading gas distributor across the UK.

CKI’s acquisition, Mr Edwards believes, stems from confidence in the UK’s stable and secure regulatory environment within which WWU is probably one of the last acquisition opportunities in the UK for such a business.

He said: “I think this is recognition that it’s been well run and consequently they don’t plan to make any changes. We have seen takeovers and acquisitions in the past where people parachute their own management in. There will be none of that and CKI will acquire this business formally on October 10 after being given clearance from the competition authorities.”

On a more personal level he added: “At the outset they asked me to stay on as CEO and I was happy to do so. They explained how they wanted to run the business which was essentially ‘hands off.’ This is what I have been used to for the last seven years and it’s the way I like to operate. I will, of course, be responsible to a board but the day-to-day running will be left to me and my management team.”

With an air of assurance Mr Edwards said there would be no dramatic change in the nature of the business.

“At the end of the day we’re a highly regulated gas distribution business,” he explained: “We don’t sell gas, we run the network so there’s no change in that respect.

“We have a long-term licence so clearly the new owners will be looking to get value from the business in terms of financial returns.”

Turning his attention to some current challenges Mr Edwards pointed out that as a regulated business WWU doesn’t sell gas to the customer consequently it cannot adjust its prices.

These are controlled through a regulatory price review process that normally takes place every five years.

“We are going through one now that will set prices from April next year for the coming eight years,” he said.

“So the whole dimension of the regulatory period has been made longer. On the one hand it gives more stability but also gives a greater degree of risk if you don’t get the deal right.”

WWU, he explains has, over the last couple of years, done an enormous amount of work on this, putting together a long-term business plan and submitting that to the regulator.

His conclusion is: “In terms of future direction it is more of the same but under different ownership.

“CKI is a global player. This business is always looking for acquisitions. It has deep pockets and it’ll be interesting to see if there will be other opportunities in the UK and Wales they may want to acquire.”

In addition to being at the helm of a highly successful company Mr Edwards is chairman of the Confederation British Industry (CBI) Wales. In this role he conducts a constant dialogue with the Welsh Government on the nation’s economic performance.

So wearing his CBI hat how does he view the economic outlook in Wales?

He said: “In essence the primary focus should all be about getting the economy back on track and achieving our main aim in Wales – that of securing growth and jobs.”

So how have the Welsh Government performed?

He said: “It’s a difficult climate in Wales and from a CBI standpoint we’re working closely with the Welsh Government, being seen as a strong supporter and critical friend respected for the voice and analysis we give to an active business minister.”

His observations, however, are not without criticism, as he explained.

“From a CBI perspective we would like to see a little more structure and more forward planning from a point of view of a coherent strategy. This means more clarity around what the medium term strategy is.

“There are several initiatives going on – Enterprise Zones, the City Regions report and we know the sector panels are up and running.What we now need to see is some specific action from these that help drive the economy forward.”

There are, he concedes, particular sensitivities in Wales around public versus private sector balance which everybody recognises. In order to move forward, he argues, we need to see the private sector growing.

“When you discuss this with CBI members it shows a mixed picture,” he said.

“Some members see shoots of growth in the manufacturing sector but generally speaking there is still a concern that companies are battening down the hatches and clearly not investing.

“Whether this is because they don’t feel inclined to invest we don’t know. There are issues around smaller companies accessing finance so we are delicately balanced at the moment but we need to inject pace and drive into the economic strategy.”

He acknowledges there are some issues where the Welsh Government doesn’t have a free hand.

He said: “Energy’s an example where only certain elements of energy strategy are devolved to the Welsh Government and that makes it difficult to have a joined-up, coherent strategy.”

He continued: “There are dilemmas in energy and conflicting priorities .

“Some are focussed on the drive to reduce carbon – the environmental drive versus the cost of energy. It’s is a delicate balance that needs to be reflected on rather than bouncing from one extreme to another. In terms of the UK government the balance has shifted slightly with the drive from carbon reduction to the cost of energy for consumers and that’s right.”

To the CEO of WWU, getting this right is critical since Wales has more people as a percentage of the population in fuel poverty than the rest of the UK.

He stated the company’s position: “For our part we are actively trying to support that position with a fuel-poverty scheme in existence where people can transfer to gas heating from other sources. Already we have helped more than 6,000 households transfer to gas with the help of partners like Warm Wales.”

He added: “Clearly there is a wider issue around energy prices. The CBI recognises that large energy users are at a disadvantage because they pay more for their energy than some European counterparts. But remedying this is not in the gift of Welsh Government even though we have lobbied hard to get some movement in that direction.”

There cannot be an oscillation between one extreme and the other. There is, he believes, no simple answer.

Of the green agenda he said: “Some years ago when the Welsh Government was setting targets some felt they were over and above the rest of the UK. That’s all well and good but not if it means that businesses in Wales suffer in comparison to the rest of the UK or other parts of the world.

“It’s fine having a banner headline, but if it doesn’t make businesses think Wales is the place to be then ultimately it works against us.”

In conclusion he said: “The only call from a business standpoint is to make sure we do not penalise business when the economy is fragile.”

As to the future, Mr Edwards is adamant that the company he serves plans to be about for a long time.

“We provide an essential service across Wales and the South West, a nuts and bolts service provider – the private delivery of a public service,” he said.

“The model is about how the deliver of public services which has been improved in both service and efficiency terms. We have improved efficiency taking 25% of costs out of the business but not by throwing people out of work, having gone from employing 1,150 people to almost 1,500 people in seven years.”

“So the future is about continuing to grow under new owners who are long-term infrastructure players. It’s about continuing to build and deliver excellent service,” he said.

To emphasis this he said: “In Wales we have an opportunity to achieve a great deal. It’s small, everyone knows each other, we have good access to ministers so we should be able to work more effectively in Wales, collectively, to drive the economy.”

He then asked how business and government could work together to improve the Welsh economy.

Answering his question, he said: “Life is difficult but we can be fleet of foot and move from idea to action quickly. We’re a small nation and the political structure is such that we should be able to make decisions within the confines of what’s devolved and do that with some speed.”

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